Directors of your Company take great pleasure in presenting the 17thAnnual Report on the business and operations of your Company and the Audited FinancialStatements for the financial year ended March 31 2018.
Pursuant to the notification dated February 16 2015 issued by theMinistry of Corporate Affairs the Company has adopted the Indian Accounting Standards("Ind AS") notified under the Companies (Indian Accounting Standards) Rules2015 with effect from April 1 2016. The performance of the Company for the FY2017-18 issummarized below:
(' in Million)
|Particulars || |
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|Total Income || |
|Profit Before Interest and Depreciation || |
|Interest and Finance Charges (net) || |
|Depreciation/ amortization || |
|Profit Before Tax || |
|Share in net (loss) of associate || |
|Profit from ordinary activities before tax and after share in net loss || |
| || || || || |
|Provision for Taxation (including Deferred Tax || |
|Charge/ Credit) || || || || |
|Net Profit After Tax || |
|Profit attributable to: || || || || |
|Owners of the Company || |
|Non-controlling Interest || |
|Total || |
|Balance in Profit & Loss Account || |
|Closing Balance in Profit & Loss Account || |
|Earning Per Share (Rs.) - Basic || |
|Earning Per Share (Rs.) - Diluted || |
RESULT OF OPERATIONS:
The consolidated total income decreased from INR 35588.15 Million toINR 35406.78 Million a decrease of 0.51% over the previous financial year. Theconsolidated Net Profit after Tax increased from INR 2792.38 Million to INR 3265.78Million a growth of 16.95% over the previous financial year. The detailed analysis of theconsolidated results forms part of the Management Discussion & Analysis Reportprovided separately as part of the Annual Report.
The standalone total income decreased from INR 9548.51 Million to INR8739.79 Million a decrease of 8.47% over the previous financial year. The standaloneProfit after Tax increased from INR 1884.59 Million to INR 1919.16 Million an increaseof 1.83% over the previous financial year.
INCREASE IN SHARE CAPITAL:
During the year your Company issued/ allotted 5214482 equity sharesof the face value of INR 10/- each on the exercise of stock options under FirstsourceSolutions Employee Stock Option Scheme 2003 (ESOS 2003). Consequently the outstandingissued subscribed and paid up capital of the Company has increased from 681308337shares to 686522819 shares of INR 10/- each aggregating to INR 6865.22 Million as onMarch 31 2018.
DIVESTITURE OF THE DOMESTIC BUSINESS:
During the year under review a Business Transfer Agreement was signedon July 7 2017 with Vertex Customer Management India Private Limited to sell a portion ofCompany's India domestic business and the said transaction/(s) has been closedsuccessfully during the period under review.
GLOBAL OPERATION CENTERS:
The Company on a consolidated basis have 37 global operation centersas on March 31 2018. The centers are located across India US UK and Philippines. 10 ofthe Company's operation centers are located in 7 cities in India 18 in US 7 in UK and 2in Philippines.
During the year the Company incurred capital expenditure of INR 625.05Million mainly towards refurbishment and maintenance of operation centers technologyupgrade and setting up of new operations centers.
The Company follows the global best practices for process excellenceand the quality framework is based on COPC principles. The Company uses innovativetechniques like Speech & Text Analytics Robotic Process Automation and Intelligentaction board to drive improvements across. Also as part of the Quality Management Systemthe Company has embraced ISO 9001:2008. The Company continues to follow processimprovement methodologies like Six Sigma Lean and Kaizen.
AWARDS AND ACCOLADES:
The Company received the following awards and accolades during theyear.
Triple awards at the Welsh Contact Centre (WCC) Awards 2018 inthe UK: Gold in 'Outsourced Contact Centre of the Year'; Gold in 'People Engagement' forthe Caridff HR teams and Individual award in the 'Trainer of the Year' categories. Theawards recognise the teams' commitment to delivering great customer experiences and makingFirstsource an employer of choice.
Won the award for 'Best Personal Entertainment and Telecoms' atthe prestigious UK Complaint Handling (UKCH) Awards 2018. The award recognises thecompany's partnership with giffgaff the community-run network which delivered recordbreaking results for the telecoms company in a highly competitive marketplace.
Won multiple awards at the North East Contact Centre Awards2017: Gold in the 'Contact Centre of the Year (under 250 seats)' category. This awardrecognises the Firstsource Middlesbrough team's commitment to understanding and respondingto customer needs and delivering great customer experiences. Silver for the MiddlesbroughHR team in the 'Recruitment Champion' category for its commitment to making Firstsourcean Employer of choice while delivering value to clients and contributing to Firstsource'soverall business performance. Individual awards in the categories of 'Inspirational Leader2017' and the 'Customer Experience Champion of the Year'.
Won 3 awards at the European Contact Centre and Customer ServiceAwards (ECCCSA's) 2017: Gold in Medium Contact Centre of the Year Silver in OutsourcingPartnership of the Year for work done with Sky and Silver in Outsourced Contact Centre ofthe Year for work done out of the Middlesbrough office in the UK. The awards recognise theteam's commitment to understanding and responding to customer needs and delivering greatcustomer experiences.
Awarded the 'BPO Contract of the Year' at the Global SourcingAssociation (GSA) Awards 2017 in recognition of the on-going
work with Sky. This win recognises Firstsource's long-term partnershipwith Sky and the success achieved by creating a joint operational management structuretransparent culture and the innovative use of technology and approach to customerexperience.
Won two awards at the UK Customer Experience Awards 2017: Goldin the Large Contact Centre category in partnership with Sky and CX Professional of theYear for Kathryn Chivers VP - Sales Operations UK. The wins celebrate Firstsource's workin Cardiff office in the UK to deliver top quality customer experiences.
Won the prestigious 'Customer Service Excellence Award' at theNASSCOM BPM Strategy Summit 2017. This award in the 'Return on Investment (ROI)' categoryrecognises Firstsource's focus on providing agile solutions across channels and creatingimmense RoI for its client.
Recognised as a 'Major Contender' in Everest Group's MortgageBPS Service Provider Landscape with Services PEAK Matrix Assessment 2017. Thepositioning recognises Firstsource's focus on excellence and delivery and highlights thecompany's commitment to providing a smart and collaborative partnership for clients.
Healthcare Provider and Payer businesses were also recognised as'Major Contender' in Everest Group's Service Provider Landscape PEAK MatrixAssessment 2017. The positioning recognises the investments and strides made in thedigital arena especially with RPA deployment for Payer and automation solutions forProvider services.
Recognised as a 'Major Contender' in Everest Group's ContactCentre Outsourcing (CCO) PEAK Matrix Assessment 2017. This positioning recognisesFirstsource's focus on excellence and delivery while highlighting the organisation'scommitment to building smart and collaborative partnership with clients.
Recognised as a 'Major Contender' in Banking BPO-ServiceProvider Landscape by Everest Group's PEAK Matrix Assessment 2017. This recognitionacknowledges the organisation's focus on excellence and celebrates its' capabilities toconsistently enhance customer experience.
Ranked as a 'Leader' in the Telecoms market by NelsonHall in oneof their industry reports. The ranking as 'Leader' significantly improves theorganisation's performance from a 'High Achiever' in the past.
Firstsource is the first BPM Company in the U.K to achieve the'Gold' standard by Investors in People (IIP). The standard defines what it takes to leadsupport and manage people for sustained success. The organisation is now in the top 7% ofbusinesses in the UK which falls under this Gold accreditation.
Firstsource recognised as a 'Leader' in the International
Association of Outsourcing Professionals' (IAOP) Global Outsourcing 100List for 2017. In addition it has also been named a 'Superstar of the Global Outsourcing100' because of its' exceptional performance and high scores achieved during the IAOPevaluation.
CONSOLIDATED FINANCIAL STATEMENTS:
In accordance with Section 129(3) of the Companies Act 2013 and inview of notification issued by the Ministry of Corporate Affairs on Ind-AS the Companyhas prepared consolidated financial statements of the Company and all its subsidiaries asper Ind-AS which forms part of this Annual Report.
Your Company takes immense pleasure to inform that the Board ofDirectors at its meeting held on May 7 2018 recommended final maiden dividend at the rateof 15% i.e. INR 1.50 per share of INR 10/- each fully paid up equity shares of the Companyfor the FY2017- 18.
APPLICABILITY OF DIVIDEND DISTRIBUTION POLICY:
Pursuant to SEBI (Listing Obligations and Disclosure Requirements)(Second Amendment) Regulations 2016 dated July 8 2016 the top five hundred listedentities based on market capitalization (calculated as on March 31 of every financialyear) shall formulate a Dividend Distribution Policy which shall be disclosed in theirannual reports and on their websites.
The Board of Directors of the Company has approved the draft ofDividend Distribution Policy at its meeting held on August 8 2017. The applicability ofthe said policy will be effective from FY 2016-17 to the Company and the same is availableon the website of the Company at the link http://www.firstsource.com/blog/wp-content/uploads/2017/10/Dividend-Distribution-Policv.pdf.
TRANSFER TO RESERVE:
The Board of Directors of the Company (hereinafter referred to as the"Board") have not recommended transfer of any amount of profit to reservesduring the year under review other than as mentioned above. Hence the remaining amount ofprofit for the financial year under review has been carried forward to the Statement ofProfit and Loss.
On a consolidated basis the Company has 18703 employees as of March31 2018.
PARTICULARS OF THE EMPLOYEES AND RELATED DISCLOSURES:
Disclosures pertaining to remuneration and other details as requiredunder Section 197(12) of the Companies Act 2013 ("Act") read with Rule 5(1) ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 form partof this Report and are annexed as Annexure I.
The statement containing particulars of employees as required underSection197(12) of the Act read with Rules 5(2) and 5(3) of the Companies (AppointmentandRemuneration of Managerial
Personnel) Rules 2014 is provided in a separate annexure forming partof this Report. Further the Report and the accounts are being sent to the membersexcluding the aforesaid annexure. In terms of Section 136 of the Act the said annexure isopen for inspection at the Registered Office of the Company. Any shareholder interested inobtaining a copy of the same may write to the Company Secretary.
During the year under review your Company has not accepted anydeposits under Section 73 of the Act and as such no amount on account of principal orinterest on public deposits was outstanding as of March 31 2018.
PARTICULARS OF LOANS INVESTMENTS GUARANTEES AND SECURITIES:
Particulars of loans given investments made guarantees given andsecurities provided along with the purpose for which the loan or guarantee or security isproposed to be utilized by the recipient are provided in the notes to the standalonefinancial statements. (Please refer to Note 5 & 28 to the standalone financialstatements).
CORPORATE SOCIAL RESPONSIBILITY INITIATIVES:
The Company seeks to be a good corporate citizen in all aspects of itsoperations and activities. We commit to operating in an economically socially andenvironmentally responsible manner whilst balancing the interests of diverse stakeholders.Our CSR Policy is governed and guided by our Group's corporate vision to enable inclusivegrowth and our aspiration to be India's leading business group serving multiple marketsegments for our customers shareholders employees and community. The Company seeks toundertake programmes in the areas of Healthcare Education Environment Arts &Culture Promotion of Sports as well as support initiatives towards Gender Equality andEmpowerment of Women.
The Board constituted a Corporate Social Responsibility (CSR)Committee pursuant to Section 135 of the Act consisting of Shashwat Goenka (Chairman)Rajesh Subramaniam Subrata Talukdar and Pradip Roy (Independent Director) as its members.The CSR Committee meets once in a year. The details of CSR Committee and its meetings aregiven in Report on Corporate Governance forming part of the Annual Report. The CSRCommittee has framed and formulated a CSR Policy indicating the activities to beundertaken by the Company in accordance with Schedule VII of the Act and the Companies(Corporate Social Responsibility Policy) Rules 2014 issued under the Act. The same hasalso been approved by the Board. The CSR policy is available on the website of the Companyat the link http://firstsource.com/blog/wp-content/uploads/2016/06/fsl-corporate-social-responsibility-policy.pdf. The Annual Report on CSR Activities asstipulated under the Act and the Listing Agreement forms an integral part of this Reportand is appended as Annexure II. The details of focus areas of engagement as mentioned inthe CSR Policy of the Company are mentioned in the said Annual Report on CSR Activities.
The CSR activities as per the provisions of the Act may also beundertaken by the Company through a registered trust. Accordingly "RP - SanjivGoenka Group CSR Trust" ("CSR Trust") was formed along
with other group companies to pursue CSR activities as mentioned in theCSR Policy of the Company. During the year the Company has spent an amount of INR 34.51Million being 2% of the average net profits of the Company for the last 3 years on CSRactivities as mentioned in the CSR Policy. Out of the said amount majority of the amounthas been contributed by the Company towards the corpus of the CSR Trust which would bespent by the CSR Trust on the focus areas as mentioned in the CSR Policy of the Company.
The CSR at the Company is a platform for giving back to the communitiesin which we live and work. The Company looks to engage employees in our focus areas wherepossible through programmes such as Employee Volunteering Payroll Giving Participatingin fundraising events Partnering with NGO's and Response to disasters.
As part of the 'Give India' Payroll Giving Program Firstsourceemployees contribute towards various charities on a monthly basis. The total contributionthis FY year was around INR 2 Million;
Firstsource donated INR 0.5 Million towards 'Wheels of
Change'. They work in the disability space and have a novel cab servicecalled 'Kickstart'. The donation was towards modification of one of their cabs to make itaccessible for people with disability;
Firstsource donated INR 0.25 Million towards Light of Life trustfor organizing a fundraiser event "Kalpataru - A Musical". This is a platformfor the underprivileged children to showcase their talent and the proceedings from thisevent was utilized for their education;
Firstsource donated INR 0.2 Million towards Foundation
For Excellence for providing Scholarship for underprivilegedEngineering students;
In Indore employees participated in a plantation driveorganized by the Government of Madhya Pradesh. The team went to Devguradiya to plant treesand were felicitated by the Forest department officials;
Employees in Chennai office visited Christ Faith Home a
shelter for more than 100 homeless children. The team
members distributed provision items to the shelter and they had achance to interact and conduct fun activities for the children;
In Mumbai employees visited Shram Yash Charitable Trust ashelter home for 32 children. The volunteers distributed snacks and collected stationerymaterials. They also had interacted with the children and conducted some fun activitiesfor them;
Employees in Pondicherry visited a service home and spentquality time with children;
The Firstsource Dream source Committee at Trichy visited 'Hopeof the Hopeless' orphanage which is home to 90 odd orphans. They spent quality time withthe children and also donated provisions as part of the 'Joy of giving' initiative;
Employees from Bangalore office visited Swanthana an NGO forunderprivileged and differently abled girls. With the support and contribution of fellowFirstsourcers the volunteers who visited the NGO donated groceries a washing machineblenders cleaning solutions blankets and bed sheets. The remaining funds were issued tothe NGO through a cheque to assist them in construction of a section that was damaged dueto rains;
Firstsource joined hands with Shine Treechy- an NGO dedicated toEnvironmental conservation and Social development in Trichy. 2000 Palm saplings wereplanted in a pre-identified area.Philippines:
Employees in Philippines visited Bahay Punlaan as part of theCSR initiative called 'Plant-a-Tree for Mother Earth'. This initiative helped inreplanting and restoring the rainforest;
A CSR activity was held in partnership with the Department ofLabour and Employment at 'Bahay Aruga' Manila and pooled in resources to provide forschool supplies and other provisions for the children at the orphanage;
Employees of the Company's office in Manila for more than 3years in a row have been sponsoring the Chosen Children Village Foundation Inc. aninternationally acclaimed facility geared towards securing the future children withspecial needs. Our employees supported this foundation by selling Christmas Cards paintedby the children of the foundation. A total of 321 Christmas cards were sold and PHP 16050was raised to support the foundation.
Supershoes fundraising were our annual charity of choice.Firstsourcers have been actively supporting Supershoes a charity which empowers childrenfighting cancer. Fundraising has involved activities like Waterside Half Marathon ErrigalPeak Challenge cake sales Funky Shoe Weeks Ice Bucket Challenge Onesie day Raffle towin tickets to the Wales vs Georgia rugby match etc. A total of GBP 3556.33 was raisedtowards Supershoes in FY17-18;
To mark World Suicide Prevention Day Aware NI held 'Mood Walk'in Derry with the aim of raising money for AWARE and the services they provide in thelocal area;
Black Eye fundraising boxing match was organized and a total ofGBP 1460 was raised to support the Altnagelvin Neonatal Intensive Care Unit (NICU);
During Christmas employees participated in donations of toys andgifts to support disadvantaged children in conjunction with the Business in The CommunityCares @ Christmas initiative across Northern Ireland sites. In Warrington ticket saledonations following the site's Christmas Party were given towards Saint Rocco's Hospice;
Staff across firstsource's offices took part in variousactivities namely 'Wear Pink to Work' day Dress down day and bake sale to createawareness around breast cancer care;
During the cold spell referred to as the 'Beast from the East'staff in Cardiff raised well over GBP 672 which was enough to buy 100+ sleeping bags100+ rucksacks and 150+ pairs of socks for the homeless;
Staff in Cardiff took part in a litter picking activity inpartnership with Business in the Community. This organization works closely withbusinesses to tackle a wide range of issues that are essential to building a fairersociety and a more sustainable future.
Multiple events were organized for Making Strides for BreastCancer. Over USD 14000 was raised from bake sales raffles yard sales Annual walkslunch events selling breast cancer prevention items jeans day penny wars etc.;
Louisville employees raised funds for Toys for Tots. Managersand supervisors all volunteered to receive a pie for every USD 15 that was placed in theirjar. Total USD 230.66 was raised for the charity;
To assist the hurricane affected in US Virgin Islands and PuertoRico employees decided to act quickly and raise donations. Two shipments were sent byboat and one shipment via freight company (all through donated time/efforts). SchoolSupply drives were organised at multiple offices. For Hurricane Harvey affected alloffices in US encouraged donation;
As part of Back to school campaign Louisville employees donatedbinders and notebooks to local schools and Colorado Springs office donated over 540 schoolsupply items;
In association with Habitat for Humanity in Louisvillecommunity clean up was helped by cleaning up around homes planting and yard maintenancein specific areas;
Blood donation drive was carried out in association with UNYTS.Employees donated a total of 36 Whole Blood Units and 8 Double Red Cell Products. Also 13employees signed up to be organ donors;
Employees from multiple offices donated a variety of items forall ages to local homeless/women's shelters and also partnered with YWCA women's shelterto provide mittens;
As part of the "Adopt a family" initiative employeesadopted a child for the holiday season and donated clothing and toys so that childrencould have a nice Christmas holiday;
Firstsource Advantage employees in association with SalvationArmy organized various fundraising events. During the past year Firstsource has donemultiple food drives with proceeds
going towards the Salvation Army Food Bank. Participation was done inPack a Backpack initiative which helped support 20 young children in need of schoolsupplies;
The Company held multiple 50/50s throughout the year and raiseda total of USD 2264 for American heart organization American Red Cross American CancerSociety etc.
The Company has implemented a comprehensive and fully integrated'Enterprise Risk Management' framework in order to anticipate identify measure managemitigate monitor and report the principal risks and uncertainties that can impact itsability to achieve its strategic business objectives.
The Company has introduced several improvements to Enterprise RiskManagement and processes to drive a common integrated view of risks and optimal riskmitigation responses. This integration is enabled by alignment of Risk Management andInternal Audit methodologies and processes in order to maximize enterprise value of theCompany and ensure high value creation for our stakeholders over a time.
The details of the 'Enterprise Risk Management' framework with detailsof the principal risks and the plans to mitigate the same are given in the 'RiskManagement Report' section of the 'Management Discussion and Analysis Report' which formspart of this Annual Report.
INTERNAL FINANCIAL CONTROLS:
The Company has in place adequate internal financial controls withreference to financial statements. Such internal financial controls over financialreporting are operating effectively and the Statutory Auditor has also expressed theiropinion on the same in the Annexures to the Auditors Report.
WHISTLE BLOWER POLICY:
The Company has a Whistle Blower Policy (the "WB Policy")with a view to provide vigil mechanism to Directors Employees and other Stakeholders todisclose instances of wrongdoing in the workplace and report instances of unethicalbehavior actual or suspected fraud or violation of the Company's code of conduct orethics policy. The WB Policy also states that this mechanism provides for adequatesafeguards against victimization of Director(s)/ Employees who avail of the mechanism andalso provides for direct access to the Chairman of the Audit Committee in exceptionalcases. The WB Policy has been posted on the website of the Company and the details of thesame are explained in the 'Report on Corporate Governance' forming part of this AnnualReport. The WB Policy is available at the website of the Company at the below link http://firstsource.com/blog/wp-content/uploads/2016/06/Whistle-Blower-Policy.pdf
PREVENTION OF SEXUAL HARRASSMENT POLICY:
The Company has a 'Prevention of Sexual Harassment Policy' in force incompliance to the requirements of Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013. The objective of this Policy is to ensure a safesecure and congenial work environment where employees deliver their best without anyinhibition threat or fear. The Company has Zero Tolerance to any form of harassmentespecially if it is sexual in nature. The complaints filed under the Policy are reportedto the Audit Committee at its quarterly meetings with details of action taken thereon.
BOARD OF DIRECTORS:
1. Subrata Talukdar (DIN 01794978) retires by rotation and beingeligible has offered himself for re-appointment at the ensuing Annual GeneralMeeting("AGM");
2. Re-appointment of Mr. Pradip Roy (DIN 00026457) as an IndependentDirector on the Board of the Company for a term of three (3) consecutive years subject toMember's approval.
All the Independent Directors of the Company have given declarationsthat they meet the criteria of independence as laid down under Section 149(6) of the Act.
Board and Audit Committee Meetings:
During the FY2017-18 the following 4 Board Meetings and AuditCommittee Meetings were held on:
1. May 5 2017;
2. August 8 2017;
3. November 1 2017; and
4. February 7 2018.
Time gap between any two meetings was not more than one hundred twenty(120) days.
The full details of the said meetings are given in the 'Report onCorporate Governance' forming part of this Annual Report.
The Familiarisation Programmes for Independent Directors:
The Company has put in place a system to familiarise its IndependentDirectors with the Company their roles rights & responsibilities in the Companynature of the industry in which the Company operates business model of the Company etc.The details of such familiarization programmes are put up on the website of the Company atthe below link: http://firstsource.com/blog/wp-content/uploads/2016/06/fsl-details-of-independent-directorsfamiliarisation-programme.pdf.
(I) Performance Evaluation of the Independent Directors and OtherIndividual Directors:
The Company has framed a policy for Appointment of Directors and SeniorManagement and Evaluation of Directors' Performance ("Board Evaluation Policy").The said policy sets out criteria for performance evaluation of Independent Directorsother NonExecutive Directors and the Executive Directors.
Pursuant to the provisions of the Act and the Securities and ExchangeBoard of India (Listing Obligations and Disclosure Requirements) Regulations 2015("Listing Regulations") the Board carries out the performance evaluation of allthe Directors (including Independent Directors) on the basis of recommendation of theNomination and Remuneration Committee and the criteria mentioned in the Board EvaluationPolicy. The Board decided that the performance evaluation of Directors should be done bythe entire Board of
Directors excluding the Director being evaluated and unanimously agreedon the following assessment criteria for evaluation of Directors' performance:
a. Attendance and active participation in the Meetings;
b. Bringing one's own experience to bear on the items for discussion;
c. Governance - i) Awareness ii) Observance; and
d. Value addition to the business aspects of the Company.
(ii) Performance Evaluation of Executive Director:
The performance of the Managing Director & CEO is evaluated on thebasis of achievement of performance targets/ criteria given to him by the Board from timeto time.
(iii) Performance Evaluation by the Board of its own performance andits Committees:
The performance of the Board is evaluated by the Board in the overallcontext of understanding by the Board of the Company's principle and values philosophyand mission statement strategic and business plans and demonstrating this through itsaction on important matters the effectiveness of the Board and the respective Committeesin providing guidance to the management of the Company and keeping them informed opencommunication the constructive participation of members and prompt decisionmaking levelof attendance in the Board meetings constructive participation in the discussion on theAgenda items monitoring cash flow profitability income & expenses productivity& other financial indicators so as to ensure that the Company achieves its plannedresults effective discharge of the functions and roles of the Board etc.
The performance of the Committees is evaluated by the members of therespective Committees on the basis of the Committee effectively performing theresponsibility as outlined in its Charter Committee meetings held at appropriatefrequency length of the meetings being appropriate open communication & constructiveparticipation of members and prompt decision-making etc.
POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION:
The criteria for Directors' appointment and for determiningqualification positive attributes and independence of a Director as mentioned in the'Policy for Appointment of Directors and Senior Management and Evaluation of Directors'Performance' in terms of Section 178(3) of the Act is mentioned below:
Appointment criteria and qualifications:
1. The Nomination and Remuneration Committee shall identify andascertain the integrity qualifications expertise and experience of the person forappointment as Director Key Managerial Personnel ("KMP") or at SeniorManagement level and recommend the same to the Board for appointment if found suitable;
2. A person should possess adequate qualifications expertise andexperience for the position he/ she is considered for appointment. The Committee hasdiscretion to decide whether qualifications expertise and experience possessed by aperson
are sufficient/ satisfactory for the concerned position; and
3. The Company shall not appoint or continue the employment of anyperson as Managing Director/ Whole time Director who has attained the age of seventyyears provided that the term of the person holding this position may be extended beyondthe age of seventy years with the approval of shareholders by passing a special resolutionbased on the explanatory statement annexed to the notice or such motion indicating thejustification for extension of appointment beyond seventy years.
Meeting of Independent Directors:
There should be atleast one meeting of Independent Directors in a yearwithout the attendance of non-independent Directors and members of the Management.
The Independent Directors in the meeting:
i. Review the performance of non-independent Directors includingManaging Director & CEO and the Board as a whole;
ii. Review the performance of the Chairperson of the Company takinginto account the views of executive Directors and nonexecutive Directors; and
iii. Assess the quality quantity and timeliness of the flow ofinformation between the Company's management and the Board that is necessaryfor the Boardto effectively and reasonably perform its duties.
The Board on the recommendation of the Nomination and RemunerationCommittee framed a Remuneration Policy for Non-Executive Directors (including IndependentDirectors) and a Remuneration Policy for Key Managerial Personnel and other Employees ofthe Company. The details of Remuneration Policy for Non-Executive Directors andIndependent Directorsare provided as Annexure IIIA and details of Remuneration Policy forKey Managerial Personnel and Other employees of the Company are provided as Annexure IIIBto this Report.
COMMITTEES OF THE BOARD:
A detailed note on the Board and its Committees is provided in the'Report on Corporate Governance' forming part of this Annual Report. The composition ofthe major Committee/(s) is as follows:
As on March 31 2018 the Audit Committee comprised of 3 IndependentDirectors namely Y. H. Malegam (Chairman) Charles Miller Smith and Ms. Grace Koshie and 1Non - Independent Director namely Subrata Talukdar.
Nomination and Remuneration Committee:
As on March 31 2018 the Nomination and Remuneration Committeecomprised of 3 Independent Directors viz. Y H. Malegam (Chairman) Charles Miller Smithand Pradip Roy and (1) NonIndependent Director namely Subrata Talukdar.
Corporate Social Responsibility (CSR Committee):
As on March 31 2018 CSR Committee comprised of Shashwat Goenka(Chairman) Rajesh Subramaniam Subrata Talukdar and 1 Independent Director namely PradipRoy.
Stakeholders Relationship Committee:
As on March 31 2018 Stakeholders Relationship Committee comprised ofmembers viz. Subrata Talukdar (Chairman) and Rajesh Subramaniam.
As on March 31 2018 Investment Committee comprised of members viz. Y.H.Malegam (Chairman) Rajesh Subramaniam and 1 Non-Independent Director namely SubrataTalukdar.
As on March 31 2018 Strategy Committee comprised of members viz.Shashwat Goenka (Chairman) Rajesh Subramaniam Subrata Talukdar and 1 IndependentDirector namely Donald W. Layden Jr.
RELATED PARTY TRANSACTIONS:
All the contracts/ arrangements/ transactions that were entered into bythe Company during the financial year with related parties were on an arm's length basisand in the ordinary course of business. During the year the Company had not entered intoany contract/ arrangement/ transaction with related parties which could be consideredmaterial requiring approval of the Board/shareholders in accordance with the policy ofthe Company on materiality of related party transactions. All Related Party Transactionsare placed before the Audit Committee for approval.
The policy on Related Party Transactions as approved by the Board isavailable on website of the Company at the below link: http://firstsource.com/blog/wp-content/uploads/2016/06/Related-Party- Transaction-Policy.pdf.
Details of Related Party Transactions are given at Note No. 24 to theStandalone Financial Statements. None of the Directors of the Company has any pecuniaryrelationships or transactions vis-a-vis the Company.
EMPLOYEES STOCK OPTION SCHEME:
With a view to provide an opportunity to the employees of the Companyto share the growth of the Company and to create longterm wealth the Company has anEmployee Stock Option Scheme (ESOS) namely the Firstsource Solutions Employee StockOption Scheme 2003 (ESOS 2003). The Scheme is applicable to the eligible employees thatinclude Employees and Directors of the Company and its Subsidiary Companies. The Scheme isin compliance with the Securities and Exchange Board of India (Share Based EmployeeBenefits) Regulations 2014 ("SEBI ESOP Regulations") as amended. There has notbeen any material change in the Scheme during the financial year. The disclosure pursuantto SEBI ESOP Regulations read with Circular No CIB/CFD/Policy/CELL/22015 dated June 162015 are given on the website of the Company (http://www.firstsource.com/us/investors-corporate-governance).
As on March 31 2018 your Company has 15 subsidiaries and 1 AssociateCompany:
Domestic Subsidiary: (1)
1. Firstsource Process Management Services Limited (Formerly known asAnunta Tech Infrastructure Services Limited) [Wholly Owned Subsidiary ("WOS") ofthe Company]
International Subsidiaries: (14)
1. Firstsource Solutions UK Limited UK (WOS of the Company)
2. Firstsource Solutions S.A. Argentina (Subsidiary of FirstsourceSolutions UK Limited)
3. Firstsource Group USA Inc. USA (WOS of the Company)
4. MedAssist Holding LLC USA (WOS of Firstsource Group USA Inc)
5. Firstsource Business Process Services LLC USA (WOS of FirstsourceGroup USA Inc)
6. Firstsource Advantage LLC USA (WOS of Firstsource Business ProcessServices LLC)
7. One Advantage LLC USA (WOS of Firstsource Business ProcessServices LLC)
8. Firstsource Solutions USA LLC USA (WOS of MedAssist Holding LLC)
9. Firstsource Transaction Services LLC USA (WOS of FirstsourceSolutions USA LLC)
10. ISGN Solutions Inc. (WOS of Firstsource Group USA Inc)
11. ISGN Fulfillment Services Inc. (WOS of ISGN Solutions Inc.)
12. ISGN Fulfillment Agency LLC (WOS of ISGN Fulfillment ServicesInc.)
13. Firstsource BPO Ireland Limited (WOS of the Company)
14. Firstsource Dialog Solutions (Private) Limited (Subsidiary of theCompany)
Associate Company: (1)
1. Nanobi Data and Analytics Private Limited
The Company has no other joint venture Company. No company has ceasedto be a joint venture or associate during the FY 2017-18.
Report on the Performance and Financial Position of Subsidiaries:
A report on the performance and financial position of each of thesubsidiaries as per the Act in the prescribed format AOC - 1 is annexed to theconsolidated financial statement and hence not repeated here for the sake of brevity. TheCompany has a policy on material subsidiaries pursuant to Regulation 16(1)(c)of theListing Regulations. The same is available on website of the Company viz: http://firstsource.com/blog/wp-content/uploads/2016/06/
MANAGEMENT DISCUSSION AND ANALYSIS REPORT:
Management Discussion and Analysis Report for the year as stipulatedunder Regulation 34(3) of the Listing Regulations is separately given and forms part ofthis Annual Report.
BUSINESS RESPONSIBILITY REPORT:
Business Responsibility Report for the year as stipulated underRegulation 34(3) of the Listing Regulations is separately given and forms part of thisAnnual Report.
REPORT ON CORPORATE GOVERNANCE:
The adherence to the corporate governance practices by the Company notonly justifies the legal obedience of the laws but dwells deeper conforming to the ethicalleadership and stability. It is the sense of good governance that our leaders portraywhich trickles down to the wider management and is further maintained across the entirefunctioning of the Company.
The Company is committed to maintain the highest standards of corporategovernance and adheres to the corporate governance requirements set out by SEBI.
The report on Corporate Governance as stipulated under provisions ofChapter IV & Schedule V of the Listing Regulations is separately given and forms partof this Annual Report. The requisite certificate from a Practicing Company Secretaryconfirming compliance of the conditions of corporate governance is attached to the Reporton Corporate Governance.
EXTRACT OF ANNUAL RETURN:
The details forming part of the extract of the Annual Return in FormMGT- 9 is annexed herewith as Annexure IV.
STATUTORY DISCLOSURES OF PARTICULARS:
A) Conservation of Energy:
The Company continues to make progress towards energy conservationacross all its operation centers. The Company is continuously monitoring earlierinitiatives of reducing energy consumption within data center/(s) and across its'operation centers. The Company similar to its previous year's initiatives of GREEN ITcontinued to replace the normal Desktops and old Thin clients with Mini Desktops/ Zerothin-clients in US Geography as the power consumption of mini desktop & Zerothin-clients was 2.5 times less than the power consumed by normal desktops and nearly 5times less during standby mode. Scripts have been deployed where possible to shut down theDesktops/ Thin clients which are not being used for more than 1 hour which helps conserveenergy.
B) Absorption of Technology:
The Company has been innovating consistently to absorb newer technologyofferings which can benefit business to improve operational efficiency with a costeffective manner. During the year the Company has invested on newer technology withSoftware defined network with Cisco on Cisco's M5 next generation blade infrastructure.The Company is also migrating it's vast range of physical servers across multiple datacenters in India US & UK on to virtual servers as a result of which there will besavings of Power costs on account of reduction in power consumption and cooling costs.This is the first step towards hosting our Applications to cloud and ease of management ofour Data center Infrastructure and Applications.
C) Foreign Exchange Earnings and Outgo Activities relating to exportsinitiatives taken to increase exports development of new export markets for services andexport plans:
The Company's income is diversified across a range of geographies andindustries. During the year 66.23% of the Company's standalone total revenues werederived from exports. The Company provides BPO services mostly to clients in NorthAmerica UK and Asia Pacific region. The Company has established direct marketing networkaround the world to boost its exports.
FOREIGN EXCHANGE EARNED AND USED:
The Company's Foreign Exchange Earnings and Outgo during the year wereas under:
(Standalone figures in ' Million)
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